Spotlight On... Drug Diversion

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Jennifer Trussell, Special Agent in Charge in the Office of Investigations, is interviewed by Roberta Baskin, Director of Media Communications.

It is becoming so pervasive that the Centers for Disease Control and Prevention has formally labeled it an "epidemic." It is one of our nation's fastest growing public health problems, and it takes a hefty toll on individuals, families, taxpayers, and society. What is the crisis? Prescription drug abuse.

According to the Congressional Budget Office, the Federal Government spent $62 billion on prescription drugs in 2010. Drug diversion, or the redirection of prescription drugs for illegitimate purposes, takes a portion of Medicare and Medicaid funds away from legitimate care. Furthermore, Federal health programs bear the added costs of additional health care as a result of patients misusing prescription drugs.

Office of Inspector General (OIG) investigations of drug diversion are on the rise. A contributing factor may be that this type of fraud can be very lucrative. In Northern California, for example, OIG agents report that a bottle of 30mg Oxycodone tablets are trafficked at a price of $1100 - 2400 a bottle! This is up to 12 times the normal price of a legally filled script. Furthermore, drug diverters may be drawn to prescription drugs because they are more "reliable" than street drugs like heroin or cocaine. Drug users know what they're getting. Meanwhile, the risk for dealers is lower because trafficking in pharmaceutical drugs is generally less dangerous than with traditional street drugs.

The problem of drug diversion is complex, and schemes often involve multiple parties. First, there are drug-seeking beneficiaries. Posing as legitimate patients, they visit doctor after doctor to obtain prescriptions drugs for themselves or to sell for a profit. For example, OIG investigated a case of a South Dakota woman who visited several physicians and clinics complaining of pain. Using multiple fake names and lying about her current medications, Shirlee Anne Clothier knowingly obtained thousands of tablets of overlapping prescription pain killers. Clothier pled guilty to false statements in July 2012.

In addition to the drug-seekers, there are the drug-providers. In many of the cases that we investigate, health care providers such as physicians or pharmacists participate in drug diversion schemes. Some of these providers have written hundreds or thousands of unlawful, medically unnecessary prescriptions which were then billed to Medicare. In some cases, these providers billed from facilities that are nothing more than store fronts or "pill mills," providing no legitimate care. The providers might even be addicted to the drugs themselves and may steal them for their own use or to sell on the streets.

One case OIG investigated with the Drug Enforcement Agency (DEA) involved five pain clinics throughout Florida that dispensed controlled substances to Medicare recipients who were known to be addicted to these drugs. The physician, Dr. Jeffrey Friedlander, and his assistant wrote the illegal prescriptions, which were then filled by a co-conspiring pharmacy. Both Dr. Friedlander and his assistant were sentenced to jail, 9 and 10 years respectively, and ordered to pay restitution. The pharmacy and its owner were also prosecuted.

As this example demonstrates, pharmacy owners or operators sometimes also play a role in drug diversion. Although most pharmacies operate legally, there are many examples where pharmacies stocked or re-labeled expired and counterfeit medications, sold them as legitimate prescriptions to unsuspecting patients, and billed Medicare or Medicaid for the drugs. OIG has also investigated cases in which pharmacies used money or drugs to bribe patients for their Medicare ID numbers and then used the numbers to bill for unneeded prescriptions.

In the case of 24 Hour Community Pharmacy in Miami, Florida, the pharmacy paid bribes to patients and a physician in order to bill Medicare for prescriptions that were never dispensed. The pharmacy owner, who had no medical background, was sentenced to 30 months in jail and ordered to pay $1.6 million in restitution. The physician was also jailed and ordered to pay significant penalties.

Related Work

OIG work on prescribers also raises concerns about the possibility of fraud and abuse, including drug diversion. For example, one OIG study found Medicare paid for drugs ordered by individuals without the authority to prescribe. Tens of thousands of these drugs were controlled substances which are of particular concern because they have potential for abuse. In another report, the OIG examined prescribing patterns in Medicare Part D and found general-care physicians with questionable patterns. Hundreds of these physicians prescribed extremely high percentages of Schedule II or III controlled substances.

Further examining pharmacies, two OIG reviews analyzed pharmacy billing across the Medicare Part D program. The OIG report Retail Pharmacies with Questionable Part D Billing found that over 2,600 retail pharmacies (4%) had questionable billing in 2009, meaning they had extremely high billing for at least one of eight measures (see the report for details on these measures and how they were developed). Together, these pharmacies billed for $5.6 billion dollars in one year alone. Although some of this billing may be legitimate, these results suggest that some pharmacies may be billing for drugs that are not medically necessary or were never provided to the beneficiary. For example, one Midwestern pharmacy billed for over 1,000 prescriptions each for 2 beneficiaries. One physician ordered almost all the prescriptions for one of these beneficiaries.

Another report, Inappropriate Medicare Part D Payments for Schedule II Drugs Billed as Refills, found that Medicare paid pharmacies $25 million for Schedule II drugs billed as refills in 2009. This raises red flags because in no circumstance is Medicare supposed to cover refills for these drugs. Schedule II drugs are labeled as such because they are highly addictive and have the highest potential for abuse of any prescription drugs legally available in the United States. Also, they are often diverted and resold for profit.

Drug diversion often involves criminal enterprises and networks. In addition to patients, providers, and pharmacies, these networks may include patient recruiters, money launderers, and street dealers and gangs. Some of these culprits have violent criminal histories, increasing the challenges and risks to law enforcement agents investigating these cases.

Combating these criminal enterprises is a top priority. OIG uses data analysis techniques to identify individuals, providers, and other co-conspirators engaging in drug diversion fraud to take down the entire scheme and all those involved. Partnerships are also key to effectively shutting down these schemes. OIG is part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) created by the Department of Health and Human Services and the Department of Justice as a multi-agency effort to fight fraud. Coordinating with DEA, State Medicaid Fraud Control Units, and other Federal, State, and local agencies, OIG will continue our efforts to end this nation's drug diversion epidemic.

Deadly Drug Diversion Fraud: The Case of Paul Boccone

Paul Boccone was President and owner of Chantilly Specialists, a pain management clinic. Boccone had no medical education or qualifications and hired a medical director and nurse practitioner who had no training or certification in pain management. Our investigation found that Boccone would coerce the providers into writing medically unnecessary prescriptions for controlled substances for patients and reduced their working hours if they did not comply. Boccone billed Medicare for many of these prescriptions.

Investigators found that Boccone's "patients" often travelled 350 miles to come to his clinic to be treated for purported severe pain and received a cursory exam at best. Boccone would encourage patients to solicit new customers to the practice, regardless of need. He would maintain security among all the drug addicts in his lobby by carrying a taser and pistol.

Boccone also treated some patients himself, introducing himself as "Doctor Boccone." He even was documented giving injections to patients. Numerous patients sustained overdoses or died from the excessive prescribing.

Boccone was sentenced to 15 years in prison and the clinic was shut down.